BANGKOK: Kasikornbank's auto loan unit is aiming for a 5 percent growth in net loans this year after two years of declines as the domestic industry is recovering slowly, said an executive of the Thai company.

The company, Thailand's sixth largest auto loan provider with a market share of 5 percent, expects its non-performing loans to be 1.7 percent of the total lending at 2016-end, below its earlier target of 1.9 percent but up from 1.54 percent at June-end, Thawee added.

The country's auto hire purchase business has bottomed out since the middle of 2015, Thawee said, adding that it was likely to recover with a modest growth of 0.5-2 percent during the rest of the year, due to improving car sales, fewer car repossessions and low interest rates.

Kasikorn Leasing, which competes with Thanachart Bank , Bank of Ayudhya, Tisco Bank and Siam Commercial Bank, wants to focus on used cars in the second half of 2016, with the market showing signs of improvement as prices of second-hand cars rose following a slump in 2013-2014, he said.

For the overall market, Kasikorn Research Centre projected auto sales to shrink 4-7 percent to 740,000-770,000 units in 2016, mainly due to last year's high base and a sharp uptick in sales before the new excise tax rate was enforced.

The domestic auto market is expected to grow 6 percent to 800,000 units in 2017, boosted by a pickup in demand and improving economy after declines in the past four years, Thawee said.

The market has been flat with auto sales down 0.2 percent in the first seven months of 2016, according to the Federation of Thai Industries.

Auto sales have been weak since May 2013 after the fading effect of a government first-car subsidy scheme, which ended in 2012 when sales jumped 81 percent. ($1 = 34.6500 baht) (Additiongal reporting and writing by Khettiya Jittapong; Editing by Subhranshu Sahu)